Investments for Busy People

If you have a life beyond your investments, you know how precious your time is. As great a long-term builder of wealth that investing can be, it's even better when you can invest in a way that minimizes the time and effort you need to put into it.

For the third week in a row, absolutely no transactions took place in the real-money Inflation-Protected Income Growth portfolio. Not a single buy. Not a single sell. No dividends or interest. Nothing but the market doing what it does best -- moving prices around. Yet in spite of that minimal activity approach, the portfolio gained more than $540 since last week's update. Indeed, once again the iPIG portfolio crossed that psychologically important 10% return level since it was first launched last December.

The secret of that success
The reason the approach works is that the iPIG portfolio is run with a business owner's attitude, rather than a trader's. A business owner puts capital at risk to make an investment, hires good people to manage the projects launched with that capital, and then reaps the rewards, both good and bad, from those investments. Not every investment works out, so the prudent business owner invests a little bit across many projects in the hope that the successes outweigh the failures and the total business thrives.

The iPIG portfolio started with $30,000 in risk capital. By buying stock in companies, it essentially hired the managers of those companies to lead the projects that are intended to produce the expected returns. By only buying companies with histories of paying and raising their dividends, the portfolio only hired managers with proven track records of rewarding their investors for the risks they were taking.

Additionally, by paying attention to the valuation of the companies behind the stocks it buys, the iPIG portfolio improves its chances of earning reasonable returns when those companies succeed. And finally, by buying with an eye toward diversification, the iPIG portfolio reduces the chance that any one investment failure will destroy the overall portfolio.

As a result, once an investing decision is made, the picks in the iPIG portfolio only need to be reviewed from time to time to make sure the valuations remain decent and the businesses deliver results. A minimum of ongoing work that lets an investor get on with life, while still participating in the potential rewards that come from investing.

Speaking of results ...
Right now, quarterly earnings season is well under way, which provides a perfect opportunity for one of those "check in from time to time" moments. While the iPIG portfolio did nothing last week, several of its picks did report, and those quarterly confessionals can help determine whether the companies are still worth owning. To summarize key results:

  • United Technologies (NYSE: UTX  ) reported decent numbers, with net earnings ahead of expectations but growth driven more by acquisitions than by organic improvements in its existing businesses. Given the company's conglomerate setup, growth by bolt-on acquisitions isn't surprising, but over the long haul, it'd be better to see its businesses growing internally as well as through acquisitions.
  • The news at Mine Safety Appliances (NYSE: MSA  ) wasn't quite as good, with both revenues and net earnings falling from year ago levels on a tough environment for the mining businesses it supports. That's a risk well known to the company and its shareholders, though, and while the weaker results did knock the company's stock down, the business has ridden through tough cycles before. It looks capable of riding through this one, too.
  • Hasbro (NASDAQ: HAS  ) , on the other hand, reported earnings that beat expectations on an operating basis, before restructuring charges knocked it down to a net loss. Given that the company is in the very seasonal toy business, that loss in an off-peak quarter is much less of a concern than it would have been in the make-or-break holiday quarter.
  • UPS (NYSE: UPS  ) kept on trucking, with a better-than-expected January and strength from eCommerce helping the company turn in an 8% growth in net reported earnings per share. Overall, UPS is operating efficiently, though its future success is tied to its ability to continue delivering more packages. As long as its e-commerce business continues to grow, though, UPS is well positioned to keep on delivering decent results.
  • Texas Instruments (NASDAQ: TXN  ) reported strong headline earnings, but those earnings were delivered more from tax benefits and lowered charges than from operational strength. Indeed, Texas Instruments' revenues actually wound up below year-ago levels, and the company warned that customers were still rather tight with ordering equipment.

All told, the results delivered by the companies in the iPIG portfolio were reasonable, but not stellar. Still, as long as the companies continue to deliver results strong enough to continue to cover and increase their dividends and their share valuations remain decent, there's no compelling reason to sell.

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iPIG Portfolio Snapshot as of April 26, 2013

Company Name

Purchase Date

No. of Shares

Total Investment (Including Commissions)

Value as of April 26, 2013

United Technologies (NYSE: UTX  )

12/10/2012

18

$1,464.82

$1,640.70

Teva Pharmaceutical (NYSE: TEVA  )

12/12/2012

38

$1,519.40

$1,464.90

J.M. Smucker 

12/13/2012

17

$1,483.45

$1,732.64

Genuine Parts (NYSE: GPC  )

12/21/2012

23

$1,476.47

$1,725.92

Mine Safety Appliances (NYSE: MSA  )

12/21/2012

36

$1,504.96

$1,716.48

Microsoft 

12/26/2012

55

$1,499.15

$1,748.45

Hasbro (NASDAQ: HAS  )

12/28/2012

43

$1,520.60

$2,032.61

NV Energy (NYSE: NVE  )

12/31/2012

84

$1,504.72

$1,778.28

United Parcel Service (NYSE: UPS  )

1/2/2013

20

$1,524.00

$1,714.20

Walgreen (NYSE: WAG  )

1/4/2013

40

$1,501.80

$1,970.80

Texas Instruments (NASDAQ: TXN  )

1/7/2013

47

$1,515.70

$1,679.78

Union Pacific (NYSE: UNP  )

1/22/2013

6

$805.42

$885.12

CSX (NYSE: CSX  )

1/22/2013

34

$712.50

$828.58

McDonald's (NYSE: MCD  )

1/24/2013

16

$1,499.64

$1,614.24

Becton, Dickinson (NYSE: BDX  )

1/31/2013

18

$1,518.64

$1,703.16

AFLAC (NYSE: AFL  )

2/5/2013

27

$1,466.35

$1,436.40

Air Products & Chemicals

2/11/2013

17

$1,510.99

$1,455.03

Raytheon (NYSE: RTN  )

2/22/2013

27

$1,473.91

$1,625.40

Emerson Electric (NYSE: EMR  )

4/3/2013

28

$1,548.12

$1,524.32

Cash

     

$3,102.28

Total Portfolio

 

 

 

$33,379.29

Data from the iPIG portfolio brokerage account, as of 26-APR-2013.

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